According to the Census Bureau's 2005 Current Population Survey (CPS), there
were 45.8 million uninsured individuals in 2004, or 15.7% of the civilian
non-institutionalized population. Those that lack insurance represent a diverse
group. Understanding the uninsured population is important for policy makers
looking to design solutions to the problem. This report describes insurance
coverage in the United States and describes the key demographic characteristics
of the uninsured.

Before discussing the uninsured, it is important to understand the nature
of insurance coverage in the U.S. Health insurance in the U.S. is provided
through several major private and public sources (see Figure
1). The majority of Americans have health insurance through either their
own, a spouse's, or a parent's employment.

Employer sponsored insurance covered 174 million people, or 59.8% of the
population in 2004.

Directly purchased insurance that people purchase on their own covers 26.9
million or 9% of the population. As a primary source of coverage, directly
purchased insurance has an even smaller share of the market. Medicare
beneficiaries often purchase direct coverage to supplement their Medicare
coverage. In fact, 37% of directly purchased private coverage is purchased
by the elderly, which is assumed by many analysts to be Medicare supplemental
insurance (Medigap), leaving only 16.9 million or 6% of the population with
directly purchased private coverage.

Government provided coverage is another important source of insurance.

The largest public coverage program is Medicare, with 39.7 million enrollees
or 14% of the population. The majority (84%) of Medicare beneficiaries are
elderly individuals age 65 and older (though some are under-65 and either
disabled or patients with end stagerenal disease).

The next largest government program is Medicaid, which on the CPS includes
those enrolled in the State Children's Health Insurance Program (SCHIP).
Medicaid and SCHIP covered 37.5 million low-income individuals (12.9% of
the population), primarily children, pregnant women, elderly, and disabled
people.(1)

Finally, the smallest coverage source was military/veterans coverage, providing
insurance to 10.7 million people, or 4% of the population.

The 45.8 million uninsured are more likely to be poor and low income than
higher income. Figure 2 shows that over half of
the uninsured are below 200% of poverty, with 25% below the poverty line
and 28% between 100% and 199% of poverty.(3)
That the uninsured are concentrated among lower-income individuals is not
surprising, given that low-income individuals are less likely to:

be working, and if they do work they are less likely to be working full time,

receive an offer of insurance, and

be able to afford an offer of coverage.

Not all low-income individuals are eligible for Medicaid. Medicaid eligibility
is based on a combination of income and population category.
The population groups that qualify for Medicaid are generally children, parents
of dependent children, pregnant women, the disabled, and the elderly. The
income levels at which these groups qualify differs from state to state,
and group to group, with coverage of children and pregnant women being available
at higher income levels, followed by the disabled and elderly, then parents
of dependent children last (though this varies by state). Childless adults
who are not disabled or elderly rarely qualify for Medicaid, even at the
very lowest income levels.

While the income distribution of the uninsured is skewed toward those with
lower incomes, Figure 2 shows 27% of the uninsured have
incomes above 300% of poverty, with one-in-ten (11%) uninsured above 500%
FPL.(4) That the uninsured comprise non-trivial
percentages of middle and upper income individuals is surprising. Those with
incomes above 300% of poverty should generally find employer insurance
affordable. Data from employers shows that average single coverage premiums
for employer sponsored insurance represent 2.0% of income at 300% FPL, and
average family coverage premiums represent 4.7% of income for a family of
four at 300% FPL (with a higher percentage for smaller families).

The uninsured are more likely to be young. Figure 3 shows
21% of the uninsured are below age 18 and 63% are under age 34. Young adults
age 18-34 are disproportionately uninsured relative to their representation
in the overall population, while older adults are slightly under-represented
relative to the overall population.

This result is likely due to the correlation between age and income as younger
adults are more likely to have lower incomes than older adults, as can be
seen in Figure 4 below. Although children and the elderly
have the highest likelihood of being below 200% of poverty, government programs
like Medicaid and SCHIP for children and Medicare for the elderly result
in those groups having the lowest uninsured rates.

The uninsured are more likely to be childless adults than parents. Adults
without children represent 45% of the U.S. under age 65 population, but 57%
of the uninsured. This is partly a function of age, since younger adults
are less like to have had children and the data above shows the disproportionate
percentage of young adults among the
uninsured.(5) In addition, childless adults who
have lower incomes may have less incentive for obtaining coverage when they
do not have responsibility for children. Finally, as mentioned above, childless
adults are less likely to be eligible for government coverage programs. With
very few exceptions childless adults, even at the lowest income levels, are
not eligible for Medicaid.

The uninsured are more likely to be white than other races or ethnicities,
comprising about half of the uninsured population
(48%).(6) However, the uninsured are
disproportionately Hispanic to a significant degree. Hispanics represent
14% of U.S. residents but comprise 30% of the uninsured. The higher uninsured
rate for Hispanics is not associated with higher poverty levels than other
groups  the poverty rate for Hispanics is slightly lower than
for African-Americans, 22.2% vs. 24.9% respectively. Rather, research has
shown that Hispanics are more likely to be employed in jobs that do not offer
health insurance, such as construction and agriculture (but when offered
health insurance they accept at the same rates at whites and
blacks).(7)

The vast majority (79%) of the uninsured are citizens. However, a
disproportionate percentage of the uninsured are non-citizens. While non-citizens
are 7% of the population, they are 21% of the uninsured. Non-citizens are
a disproportionate percentage of the uninsured because they are more likely
to have characteristics associated with higher uninsured rates. Non-citizens
are more likely than citizens to:

The vast majority of the uninsured are working individuals or the children
of those who work.(8) In 2004, almost half of
the uninsured (46%) worked full time, and another 28% worked part time or
for part of the year. Many of the uninsured worked for firms that did not
offer coverage, or if their employers offered coverage, they either were
not eligible or did not accept the offer. Based on data from the 2001 February
Supplement to the CPS matched with the 2001 March Supplement to the CPS,
18 million workers were not offered coverage and another 6 million were not
eligible for coverage that their firm offered, representing 54% of the
uninsured.(9) In addition, there are 6.9 million
workers and dependents that have declined employer coverage and remain uninsured
(19% of the uninsured).(10) These individuals
are most likely to decline employer coverage because it was too costly: 3.8
million, or 52% said coverage was too expensive. The February-March match
file shows another 2.9 million dependents who live with a family member covered
by employer sponsored insurance. While there are no follow-up questions on
the February CPS to determine why dependents are uninsured, one can surmise
that many of those dependents could have been insured under the covered worker's
employer plan but the worker found it unaffordable to purchase family
coverage.(11)

Part-time workers comprise a disproportionately large percentage of the uninsured
because employers often do not offer coverage to part-time workers and because
part-time income may make offered insurance less affordable. The median family
income of part-time workers is about $13,000 less than the median family
income of full-time workers, $63,500 vs. $50,300.

The uninsured are more likely to work in small firms than in large firms.
Those in firms with less than 100 employees and their children comprise almost
half of the uninsured (46%).(12) Small firms,
particularly those with fewer than 10 workers, are much less likely to offer
insurance  only 52% of such very small firms offer coverage compared
to 99% of firms with more than 200
employees.(13) The family income of those who
work in small firms is also somewhat less than those in large firms, as workers
in firms with fewer than 10 employees have median family incomes of about
$53,000 while workers in firms with more than 1,000 employees have median
family incomes of about $65,000.(14)

The CPS reported figure of 45.8 million uninsured individuals represents
the number of uninsured for a full year.(16)
However, there are other ways to measure the uninsured, such as those uninsured
at a given point-in-time, and those who were ever uninsured for some length
of time during the year. The ever uninsured figure is of particular
policy relevance because it reveals how many individuals faced the significant
financial risk of having a medical emergency that would have to be paid for
out of pocket. According to the Medical Expenditure Panel Survey (MEPS),
there were 64 million people who faced at least one month without coverage
in 2001.(17)

The MEPS data demonstrate how the uninsured population is not one unchanging
group of individuals, but rather a constantly changing group, mirroring the
changing nature of employment and income in the economy. While a significant
percentage of the uninsured are without coverage for a full year (and longer),
an equally significant percentage are uninsured for short periods of time.
Of those 64 million who lacked coverage at some point in 2001, 51% were uninsured
for at least one year. But one-in-five (20%) of the uninsured that year were
without coverage for three months or less, and one-in-three (34%) were uninsured
for 6 months or less. Clearly some people face long-term problems obtaining
coverage, either due to their inability to afford coverage or being employed
in jobs that do not offer coverage. Others, by contrast, face short-terms
spells without coverage as they transition between jobs or go through other
life transitions.

This analysis has presented an overview of the uninsured population. While
the uninsured are concentrated disproportionately in certain subgroups, the
uninsured are clearly a diverse population comprised of people from all income
levels, racial groups and employment types. The data presented in this report
come primarily from the CPS, which is only one of four major government surveys
that include information on the uninsured. Each survey has its advantages
and disadvantages for purposes of measuring the uninsured. Moreover, it is
recognized that the CPS finds considerably fewer individuals enrolled in
public coverage than found in official program statistics. Perhaps as a result
of this public program undercount, the CPS finds far more individuals without
coverage for 12 months than other surveys. To obtain the most accurate picture
of the uninsured, follow-up analysis is warranted regarding other government
surveys, along with analysis that investigates the implications of the public
coverage undercount.

1. According to official CMS program statistics, Medicaid
is actually the larger program. Based on Administrative records, the CMS
Office of the Actuary projects 2004 enrollment of 56 million, compared to
the CPS 37.5 million. While CMS administrative totals also include some
institutionalized individuals and some individuals who only receive aid with
Medicare cost sharing, neither of which should report Medicaid on the CPS,
the difference between CMS data and CPS data is still substantial. Also note
that the CPS estimate for Medicaid includes children covered in SCHIP and
a small number in other public programs. Further research is ongoing to refine
the estimated number of people covered by Medicaid.

2. The percentages do not add to 100% because individuals
can have more than one type of insurance either simultaneously or sequentially
during the year.

3. The poverty line in 2004 was $9,310 for a single individual
and $18,850 for a family of four.

4. In 2004, 300% of poverty was $27,930 for a single individual
and $56,550 for a family of four, and 500% of poverty was $46,550 for a single
individual and $94,250 for a family of four.

5. According to the CPS, childless adults are more likely
to be both young adults who have not yet had children and older adults with
grown children who have left the household.

8. For this memo, adults were labeled according to their
own work status, but children were assigned to the parent with the most
work during the year. That is, if there was a full-time/full-year worker
in the family and a part-time/part-year worker, any children in the household
would be labeled full-time/full-year.

9. The numbers are on a base of 38 million uninsured in 2001.
Contract workers, part-time workers, and in some cases workers who have not
worked for the firm long enough are often not eligible for employer insurance.

10. Data from a file matching the March and February supplements
to the CPS. The March supplement contains detailed demographic and income
data for the population. The February supplement contains questions about
employer offers and worker take-up of insurance. The match was performed
by the Actuarial Research Corporation.

11. According to the 1999 Kaiser/HRET Employer Health Benefits
Survey, 99% of firms that offer workers coverage also offer dependents coverage
(though the employer contribution rate may be lower for dependent coverage).

12. To be consistent with the data on work status, children
are again assigned to the parent who has the 'highest' work status.

14. Income data based on ASPE tabulations of the 2005 CPS.
Also note that the actual difference in total compensation between small
and large firm employees is greater than what can be measured on the CPS.
Large firm employees receive fringe benefits that total about 35% of wages
on average, according to the Department of Labor. Given that small firm employees
are far less likely to receive such fringe benefits, a comparison of compensation
that took fringe benefits into account would show wider disparities between
the two groups than given above.

15. The percentages total to less than 100% because those
who do not work are left out of the table.

16. The structure of the CPS questionnaire elicits uninsured status for the
entire preceding year. However, there has been considerable debate among
researchers for many years as to whether the CPS was actually eliciting uninsured
status at the time of the survey. The debate arose because the CPS figure
of 45.0 million uninsured is actually far closer to other surveys' point-in-time
counts of the uninsured than those other surveys' full-year uninsured counts.
See ASPE Issue Brief,
Understanding
Estimates of the Uninsured: Putting the Differences in Context,
http://www.aspe.hhs.gov/health/reports/hiestimates.htm.